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FastForward has net income of $19,090 and assets at the beginning of the year of $209,000. Its assets at the end of the year total $264,000. Compute its return on assets.

Sagot :

Given:

Net income = $19,090

Assets at the beginning of the year = $209,000.

Assets at the end of the year total = $264,000.

To find:

The return on assets.

Solution:

Formula used:

[tex]\text{Return of assets}=\dfrac{\text{Net income}}{\text{Average of assets at the beginning and at the end}}[/tex]

Using the above formula, we get

[tex]\text{Return of assets}=\dfrac{19090}{\dfrac{20900+264000}{2}}[/tex]

[tex]\text{Return of assets}=\dfrac{19090}{\dfrac{473000}{2}}[/tex]

[tex]\text{Return of assets}=\dfrac{19090}{236500}[/tex]

[tex]\text{Return of assets}\approx 0.0807[/tex]

The percentage form of 0.0807 is 8.07%.

Therefore, the return on assets is 8.07%.

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